ALEC Tries to Salvage Brand as Members Exit to Protect Their Own

Group Chair Acknowledges 'Mission Creep'

For more than 30 years, the American Legislative Exchange Council has provided the nation's corporations with "model" legislation that would further their goals and access to hundreds of state lawmakers. But now some of the nation's biggest corporations have backed away from ALEC as it becomes mired in controversy -- and that has the group reconsidering recent actions and acknowledging that it may have experienced "mission creep."

ALEC ran into trouble last year when a lawsuit prompted the disclosure of information about the group's membership, relationship with lawmakers and hundreds of model bills the organization has drafted. And while a nonprofit-as-lobbyist controversy isn't necessarily the stuff that fires the popular imagination, some items on its agenda -- including the promotion of the "stand your ground law" that some have blamed for Trayvon Martin's death -- have increased the pressure on major corporations to abandon it.

McDonald's, Wal-Mart, Coca-Cola, Pepsi and Kraft are some of companies that have recently left ALEC for various reasons, but dozens of others remain. According to records now made public, executives from AT&T, Bayer Corp., ExxonMobil Corp., Johnson & Johnson and many other companies remain on the board.

"These are some of America's corporate giants and they are certainly brand sensitive," said Common Cause deputy director Doug Clopp. Common Cause seized upon the information released via last year's lawsuit to file a whistle-blower suit accusing ALEC of defrauding the IRS for years by claiming a nonprofit status that allows for very limited lobbying.

"ALEC was established for the sole purpose of lobbying," Mr. Clopp said.

Common Cause has also filed complaints in more than 35 states against ALEC, accusing the organization of campaign-finance violations and failing to register its members as lobbyists. It's unclear at this point how many of those states will act on the complaints.

Mr. Clopp said the links between ALEC and the stand-your-ground, anti-immigrant and voter identification legislation introduced in state legislatures worried corporations that market their products to minorities.

"Kraft knows who buys lots of mac and cheese," Mr. Clopp said.

Other groups that also have ALEC in the bull's-eye include the Center for Media & Democracy and Color of Change.

"It's obviously been a very difficult thing to go through," said ALEC National Chairman David Frizzell, a Republican member of the Indiana legislature, of the attacks on his organization. He said the bad publicity is based on "misconceptions and half-truths" about ALEC's goals, which are the promotion of a free market and a much smaller federal government.

Mr. Frizzell said about half of the corporations that have left ALEC have done so for reasons other than the criticism by what he calls hostile liberal groups.

"It's unfair to say they were unhappy with us," he said

Mr. Frizzell also said the Common Cause whistle-blower suit is baseless because ALEC is registered with the IRS as a "501(h)," which allows a nonprofit to spend up to $1 million a year on lobbying.

Companies that have abandoned ALEC have been diplomatic about their reasons.

"We review all organizations in which we have membership each year to assure they serve a critical purpose for PepsiCo. Our membership expired at the end of 2011 and we chose not to renew," the soft drink company said in a statement. McDonald's also said it chose not to renew its membership for 2012.

A Walmart spokeswoman said "we feel that the divide between their activities and our purpose as a business has become too wide."

Common Cause said hundreds of state legislators, mostly Republican, pay $100 each for a two-year membership in ALEC. But the lion's share of the group's budget -- estimated at $7 million -- comes from its corporate sponsors. Companies pay $7,000 to $25,000 to join ALEC, according to Common Cause.

Mr. Frizzell called his organization a "caldron of ideas for legislators" and a place policy issue can be debated. But he said his group may have been a victim of "mission creep" that distracted it from core values.

He said ALEC is looking at doing some things differently and may abandon its work on some legislation, like the stand-your-ground bills.

"It may be better for some other organizations to deal with that ," Mr. Frizzell said.